Grand bargain shrinks as Congress nears U.S. budget deadline

Standard & Poor’s 500 Index futures expiring in March increased 0.2 percent to 1,422.1 at 6:42 a.m. in New York. Dow Jones Industrial Average futures gained 15 points, or 0.1 percent, to 13,080, at 6:10 a.m. in New York. The yield on the benchmark 10-year Treasury bond was 1.78 percent at 7:02 a.m. in New York, little changed from Dec. 24, according to Bloomberg Bond Trader prices.

U.S. equity markets were closed for the Christmas holiday yesterday. The S&P 500 dropped 0.2 percent on Dec. 24 amid concern policy makers will fail to strike a compromise.

Before going on vacation with his family, Obama urged leaders of both parties to put together an interim bill to keep taxes from rising on middle-income Americans as they work on a more comprehensive package.

On Christmas day, Obama and First Lady Michelle Obama greeted troops and their families having dinner at Marine Corps Base Hawaii in Kaneohe Bay. The president thanked the families for their sacrifices.

Assurance Needed

Senate Democratic leaders have said they won’t take action on a fallback plan unless they have assurances from Boehner that he will bring it up in the House and let it pass with a combination of Democratic and Republican votes, and from McConnell that Senate Republicans won’t filibuster it.

“A comprehensive solution to the looming fiscal cliff will need to be a bipartisan solution,” Reid said on the chamber’s floor Dec. 21. “No comprehensive agreement can pass either chamber without both Democrats and Republican votes.”

Senator Charles Schumer of New York, the chamber’s third-ranking Democrat, told reporters Dec. 21 that “the key to this is the House.” McConnell wouldn’t “want to have his members put their necks on the line for a deal that may not pass the House,” he said.

Schumer and Reid called on Boehner to resume talks with Obama. Failing to reach a budget deal would push the U.S. into recession for the first half of 2013, according to the nonpartisan Congressional Budget Office.